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Friday, February 10, 2017

BOOK SUMMARY 315 How Music Got Free

BOOK SUMMARY 315

How Music Got Free

·Summary written by: Ingrid Urgolites

“The real problem was the public. Consumers
were breaking the law. They forked over hundreds of dollars for iPods but
wouldn’t give the record industry a dime. They still, somehow, didn't seem to
understand that file-sharing was illegal.”

- How Music Got Free, page 193

Stephen Witt relates the captivating story of music
piracy in the well articulated How Music Got Free: A Story of Obsession
and Invention. This story seems almost surreal; it details how the music
industry suffered because of idealism and resistance to change. The .mp3 was
rejected by the industry because it undermined profits, but it was the ultimate
champion in the market because people chose it for its technological edge and
price. The music industry did not support new technology that would decrease
profits so, at first, .mp3s were only available for free. A subculture of
curious, street smart, technologically savvy teenagers and young adults with
extra time became iconoclastic innovators that irrevocably disrupted the music
industry. The technically unsophisticated public approved of what they knew was
illegal, but did not fully understand. This fascinating look inside the
disruption of a massive industry offers great lessons for organizations and
teams that are striving to stay relevant in a shifting market.

The Golden Egg

Create Quality and Value for the Consumer

"You no longer had to buy the whole album. Even if
you held on to some atavistic notion of paying for your music, you could just
buy the mp3 single on iTunes. For years the industry had been selling songs
that even their creators acknowledged were not very good. Now they were paying
the price."- How Music Got Free, page 198

Music, the intellectual property of recording artists,
was work that sold for a substantial price. The industry sold CDs produced for
a dollar, for a retail price of $16.95 (or more). The artists and the industry
would profit considerably even if the consumer bought the CD for one good song.
The industry benefited from offering little value to the customer. They
recognized trends in music, but ignored young patrons financial limitations and
had an indifference and ignorance when it came to the emerging power of the
internet.

This corporate profit-driven perspective often results in
tunnel vision. We become attached to what drives profits and ignore the point
of view of the consumer. When we resist technology that reduces profit and
ignore innovators, we may lose our customers. Be aware of the early
adopters—new technology often fails, but if we recognize innovation that
improves lives, saves money, or makes life more convenient or enjoyable, we can
identify new opportunities. It is important to understand not only the interest
of our customers but also their worldview. If people feel taken advantage of,
they easily justify actions they know are wrong. Sometimes moral judgement
depends as much on fact as it depends on individual understanding and
perspective.

Gem #1

Be Open to Exchange of Ideas and Technology

"But the biggest draw of all was the mere existence
of such forums. They were a place to learn about emerging technology, about new
brands, about underground shows, and even about the way the music business
really functioned. iTunes was just a store, basically a mall - Oink was a
community."- How Music Got Free, pages 209-210

Those who started file-sharing and music piracy were
culturally opposed to selling the pirated music, movies, or software—their
mission was driven by an ideological desire for community, not profits. Many
people spent their money and time on purchasing and uploading files with no
financial gain. Their goal was to archive music or share information and
connect with a community as often as it was to disrupt the unreasonably
affluent entertainment industry. The average person did not understand why
something amazing that was accessible, convenient, available and shareable for
free should be illegal.

People are wired to think about themselves, yet focusing
on the wants and needs of the customer is the best way to protect your business
and help it flourish. The more open we are to free exchange of ideas the more
aware we become of developing technology and the changing perspectives of our
customers.

The internet has connected us as we have never been
connected before. We can exchange ideas, information, programs, and files, with
anyone with an internet connection. The internet eliminated many gatekeepers of
the past—the record labels, publishers, etc. who ensured the creators of
intellectual property profited from their work, and who chose who would profit
and how much. The open exchange of information allows ideas to win instead of
people—meritocracy, not politics, determine earnings. Consumers have the same
amount of disposable income whether or not we restrict their choices. With more
options and information available, people invest in the most useful ideas and
products. If we can move beyond gatekeeping to facilitate connections, we open
up more possibilities for significant innovation.

Gem #2

Recognize the Opportunity in Every Crisis

"Vevo took over thirty years of creative output from
more than 10,000 artists that had been written off as promotional cost and
transformed it into a high-growth profit center."- How Music Got Free,
page 233

Now, music is almost entirely digital, and piracy is largely
a problem of the past. Advertisers pay for exposure on music videos previously
produced to sell albums. The videos are now a source of free music to the
public. The public willingly pays for quality streaming and downloaded mp3s.
The cost of a single CD exceeds most monthly subscriptions to music, movies,
books, software, and even classes. These are all affordable and widely
available online. The music industry is not as prosperous as it once was, but
the industry has found new ways to provide the consumer with what it wants
while making a profit.

The Chinese character for crisis includes the character
for “danger” then the character for “opportunity.” Often in a crisis, we sense
the danger and forget to look for the opportunity. Our reaction may be denial
and avoidance, like the music industry’s response to piracy. The public at
large saw the opportunity and ignored the danger. The law protected the music
industry, but people did not understand the law or identify with extravagant
riches flaunted in the entertainment industry. Understanding the customer’s
perspective and recognizing new opportunities has facilitated change that
benefits both the consumer and the industry.

Knowing your customer is one of the most necessary but
often elusive requirements for any successful business. Your client is not only
the one that pays for the goods or services you provide but also those who use
them and are affected by their use. People recognize what benefits them. The
best way to identify new benefits to the customer is to become aware of and
responsive to their choices and perspective. Unexpected events may result in
crisis, but a strong defence might close the door of opportunity. Respect for
the customers perspective and desires allows us to find new and better ways to
serve them and profit from their choices.